Helium is a ‘complex interplay’

The Helium: Markets Reimagined, Part 2 webinar heard Tim Rynott, CEO and Founder of Four Corners Helium, outline the complexities facing the helium sector as it continues to grapple with supply shortages, financing and infrastructural issues, and permitting.

“There’s this three-way interplay between scientists, land men and engineers,” he said.

“A common conception is that Upstream starts with the geeky geo-scientist that grinds away searching for the perfect location, but in reality it’s a complex interplay of geologists, geophysicists, land men, engineers and production engineers, and you may as well add psychic to the list.”

He added that there is constant back-and-forth interchange between those disciplines, and underpinning everything is helium has to be financed effectively and produced at a commodity price that will turn a profit.

“It doesn’t matter your skillset,” he said. “Anyone in this business can become a hero or goat – it’s tough. Exploration teams are grinding through massive amounts of data at a torrid pace, trying to stay ahead of the competition.”

Invariably you end up spiting a well with only about 60 to 80% of the pieces of the puzzle in place, he added.

“And that leads to another important factor – luck. I’ve met many successful people and all of them will say luck plays a factor in this high stakes upstream game.”

Helium has also faced other inherent challenges, such as the lack of ‘modern seismic’, infrastructural issues and ‘tortuous’ delays with permits.

“Over the past century, natural gas really didn’t hold much value. Therefore many original pipelines were only associated with oil fields, to move associated gas. Fast forward to today, when a prospective helium trend is associated with non hydrocarbon fields, which is becoming more common, this inherently means lack of pipelines to move gas.

“We have extremely complex science, infrastructure delays and privately owned helium processing plants shouting to the skies ‘please bring us helium’.”

Rynott said it is on the ‘front lines’ trying to make a difference. “Supporting a company like Grand Gulf Energy, which is sponsoring this event, goes directly to us getting wells drilled in Utah. In addition, Four Corners Helium has other projects in the queue. There are many challenges but we’re going to get there.”

Rynott cited the Federal Helium Reserve producing 2m-2.5m cft of helium per day and since the drilling of the first helium well, eight years ago, new helium production has been less than 800,000 cft of helium a day – or about one-third of what needs to be replaced from the Federal Reserve.

“Plus this doesn’t include the 150,000-250,000 cft in annual demand growth,” he said.

On the plus side, companies like North America Helium are purposely front loaded initial CAPEX to midstream and downstream operations.

“They hope to start drilling 30 wells a year,” he said. “The Mid-Continent is a great playground, it’s got really interesting subtle stratographic traps, but they’ve got to get their critical seismic algorithms perfected to lower the risk. You’ve got basins like Raton – they’re very important now, offer inexpensive drilling and high helium percentage.

“Then in the Rockies – here is a statistic du jour. LaBarge field in south-west Wyoming, and Doe Canyon in south-west Colorado – their combined plus/minus 20 wells actually supply over 50% of North America’s helium needs. Think of that – these are really big wells.”

In a recent market update, Grand Gulf Energy reported at 1% helium, an analogous Doe Canyon well at a raw gas rate of 20m cf/d would produce 200,000 cf of helium a day or 73 million cf annually. The Second Red Helium Project well is planned for Q4.

Rynott said the “secret sauce” is having leading companies such as ExxonMobil, Air Products and newcomer Grand Gulf Energy actively developing the helium sector.

“I believe North America does have the resource, the drive, there are multiple play types to handle our domestic needs in future – it’s going to take some time – and in theory we should be able to export helium, like ExxonMobil is doing now,” he said.

To watch the gasworld webinar on catch up, click here.

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